Poulsbo City Council intends to adopt tax for affordable housing

Thanks to the passage of House Bill (HB) 1406, Poulsbo, like many cities in Washington, now have the opportunity to adopt a sales and use tax, the revenues of which would be allocated towards affordable housing.

HB 1406 was signed into law on April 28, 2019 and signed by Governor Jay Inslee on May 9.

The bill encourages cities and counties to invest in affordable and supportive housing by allowing these jurisdictions to retain a portion of the 6.5% sales tax that the state collects. So long as the money retained goes toward funding projects that create affordable or supportive housing.

Distribution of the money retained would begin in 2020. The Washington State Department of Revenue would determine the max revenue a city would receive based upon its 2019 fiscal year in sales taxes.

The City of Poulsbo is allowed to Levy 0.073% of the sales tax, which comes out to about $33,000 annually going towards affordable housing. However this amount could be doubled if Kitsap County intends to levy its portion as well.

Poulsbo could enter into an interlocal agreement with Kitsap County for it to pass through the amount which it deems could be used by the city.

There are a few ways in which these funds can be used within the scope of creating affordable housing.

The funds could be used to acquire, rehabilitate or construct affordable housing. This may include new units within an existing structure or facility providing supportive housing services or funding operations and maintenance costs of new units of pre-existing affordable housing venues.

Since the city of Poulsbo’s population is less than 100,000, the funds could also go towards rent assistance, which could include deposits for first and last month’s rent.

The housing and services provided through these funds may only be for persons whose income is at or below 60% of the median income of the county imposing the tax.

The funds can also be pooled with those of the county, other cities participating in the tax or public housing authorities as pledges for bonds issued.

If the City of Poulsbo does decide to formally adopt this resolution it must do so by Jan. 28, 2020. It must also inform the Department of Revenue within 30 days of that adoption.

“This is a step in the process to achieve this. However, it is only intent. We may find that with only $33,000 available to use, we will spend more staff time getting it then what it is worth,” noted council member David Musgrove.

“But if we do pursue it, this is the line we get in,” Musgrove noted.

To be eligible for this opportunity, the city needs to come up with a process for allocation and use of the funds. It will also need to include working with affordable housing advocate groups, such as Kitsap Homes of Compassion.

The Washington State Department of Commerce is currently working on application guidelines to allow for grant funding for plan development.

The council ultimately passed the resolution of intent.

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